How much personal loan can I afford based on my income?

The math: Monthly gross income $5,000. Target 35% DTI: $5,000 x 0.35 = $1,750. Existing payments (car $350, credit card min $100, student loan $200) = $650. Max new loan payment = $1,750 - $650 = $1,100.

Converting payment to loan size: Use a loan payment calculator to work backward. A $1,100/month payment at 12% APR for 36 months supports roughly a $33,000 loan. At 24% APR for the same term, that same payment only supports about $28,000.

Why 35% is the ceiling, not the goal: At 35-40% DTI you are approved but stretched. Any income disruption puts you at risk. A more comfortable level is 20-28% DTI total. If you can get the new payment under 15% of gross income, you are in solid shape.

Total cost, not just monthly payment: A $500/month payment over 60 months at 18% APR means $10,000 in total interest on a $20,000 loan. The monthly feels manageable but the total cost is real. Run the math both ways.

Factor in the purpose: A debt consolidation loan that eliminates $800/month in card minimums while adding a $600/month loan payment is a net improvement of $200/month even at a higher total balance. An additive loan for discretionary spending worsens your position even if you can technically afford the payment.

Account for job and income uncertainty: Lenders qualify you on current income. You should qualify yourself on income that would survive 3-6 months of job loss or a 20% pay cut. Build in a personal stress test.